iPhone Prices Under Competitive Pressure

Phone prices are being aggressively lowered by Apple's competition and Apple appears to be responding with price cuts, something we haven't seen before. Never mind that excellent Android and Windows Phones can be had for a lot less than the iPhone's $199 with a 2 year plan; more and more users are opting for older and cheaper iPhone models. The bottom line of all this is that Apple's average selling price for an iPhone is going down.

Obviously the iPhone, and the iPhone 5 in particular, are big hits. iPhones have always been big sellers in spite of Apple's premium positioning in the market. But this may be changing, with the biggest competition coming from Apple itself.

Even more interesting is the effect in iPhone 5 sales of iPhone 4S sales. At the same time that Apple released the iPhone 5 they discounted the iPhone 4 and 4S. The 4S from Apple costs $99 with a 2 year plan and the iPhone 4 is free. But you can get a 4S from retailers for $49 or less. I doubt anyone discounts the iPhone 4 below free.

The CIRP data, as reported by AllThingsD, shows that the iPhone 5 accounted for 68 percent of iPhone sales in its first month on the market. The iPhone 4S accounted for 90 percent of iPhone sales in the analogous period.

The bottom line of all this is that Apple's average selling price for an iPhone is going down.

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